The Strategic Role of a Treasurer

Rüdiger Schlecht
Rüdiger Schlecht

Rüdiger Schlecht joined BELLIN in 2005. In charge of system consulting, user training and process consulting for over ten years, he is now Head of the newly formed “Customer Advisory” section. He worked for the Deutsche Bank AG corporate finance division and as Head of Treasury of a publicly traded software company for many years and brings immense treasury know-how to the job.

Read time: 5 mins
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Many of you are familiar with the dilemma: once a month, treasurers in multinational companies eagerly await their group-wide liquidity overview. What finally lands on their desk represents the status at the end of the previous month, arrived with a few days delay. By the time the complete data is available, the anxiously awaited report is often yesterday’s news.

Old-school collecting of treasury data: too little too late

For the treasurer this effectively means that in many cases he only gets to see a complete overview of all companies’ finances once a month. Intra-month developments often remain in the dark. So if a report shows surplus liquidity for a specific company, it’s quite possible that this money has already been spent or used elsewhere by the time the figures are available. This translates to a retrograde treasury permanently focused on the last reporting date and with the frustrating motto: reaction instead of action.

Treasury data the TMS way: complete and on time

Thanks to modern treasury management systems, this is now a scenario of the past. Treasurers enjoy group-wide visibility down to the smallest detail at the touch of a button. It is no longer necessary to spend days on end performing tedious data collection; data is instantly available at all times. For treasurers, this means that they’ve graduated from being full-time “data collectors” and are now always aware of what’s going on in their subsidiaries. This rids them of a task which used to account for a huge part of a treasurer’s professional portfolio. But what does this shift in responsibilities actually mean for treasury?

Treasurers as data strategists: a shift in priorities

The time a treasurer saves by no longer having to collect data all day, can now be dedicated to other tasks.

“The treasurer focused on the past and flying without a compass has become a strategist with foresight.”

Backed up by up-to-date and complete information, treasurers can concentrate on what actually constitutes their main priority: using available data as basis for forward-looking risk management and the corresponding strategic decisions.

This can take many different shapes and forms.

The liquidity overview

One main aspect is the liquidity overview. While treasurers previously had to spend all their energy on obtaining an overview of the situation in all group companies, they’ve now got the relevant data available, reliably and at all times – not just at the end of the month but in real time. This paves the way for carefully considered financial decisions:

  • Which subsidiary has surplus liquidity that could be used elsewhere in the group?
  • Who needs an intercompany loan?
  • Which investments make sense and how can a refinancing be implemented most effectively?

Today’s treasurers can be confident. They’ve now got the data, the capacity and the leisure to deal with such questions and to make the right decisions at the right time. The enables long-term planning and sufficient liquidity is never as issue. Because we need to remember: liquidity always comes before profit.

Risk Management

This also means that the time treasurers gain by not having to spend their days collecting data can be dedicated to the most essential aspect of treasury: to risk management. Thanks to their improved overview, treasurers are always aware of everything and can see immediately where risks need to be hedged. On one hand, they’ve always got access to up-to-date data; on the other hand, no one is able to withhold any data. There’s always complete transparency for all group companies.

  • Which interest and risks can be identified?
  • Which currency risks can be identified?
  • How to best hedge default risk?

Treasurers are always on the ball and this ensures the necessary liquidity in all companies as well as for the whole group long term. In light of ever increasing volatilities in today’s markets and the new challenges for treasury management that come with them, treasurers must implement appropriate measures regarding their workflows. Having the time and capacities for this can make or break a company.

Security and Compliance

Another crucial factor to modern TMS-based treasury management is security, and with it compliance. Treasurers no longer have to tediously maintain authorization rights for payment processing in various different systems. As payments are fully integrated into a group-wide, single system all rights must be recorded centrally and only have to be maintained in one place. This not only speeds up payment processing but mainly makes it much more secure.  Add to this other security measures, such as payment verification, and treasurers can rest assured that no payment can be processed without the signature of the authorized signatory and that the system will adhere to the pre-defined authorization structures. In turn, this ensures compliance with increasingly strict audit regulations.

At a glance: treasury then and now

Tediously collected data Data at the touch of a button
Treasury focus on the past Treasury prepared for the future
Outdated, incomplete liquidity overview Real-time, complete liquidity overview
Risk management decisions based on unreliable data Sound basis for risk management decision-making
Insecure processes and lack of compliance Secure processes and full compliance

All this shows how diverse the fields are in which treasurers can profit from the introduction of modern treasury management systems. One thing is for sure: the era of tedious data collection is behind us. Modern treasurers are strategists with foresight.

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